BPM Announces New High Grade Gold Discovery at Claw Project
Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 1,670,000 BPM Shares and 850,000 BPM Options at the time of publishing this article. The Company has been engaged by BPM to share our commentary on the progress of our Investment in BPM over time.
A great time for a new gold discovery.
With the gold price on the rise and now at all times highs of US$2,631/oz.
And finally, it looks like the market has got a taste for small cap gold stocks.
On Wednesday last week, our Investment, BPM Minerals (ASX:BPM) announced a drill intercept of 30m at 1.8g/t of gold at its Claw project.
This hit was significant enough for BPM to declare it a new high grade gold discovery.
AND the intercept starts from a depth of just 25m.
(Source)
BPM’s share price hit a high of 14.5c on the day, up almost 200% from its starting point of 5c, and has now settled back to trade around ~9c
This intercept and new discovery is from aircore drilling (which is lower cost, shallow drillholes).
BPM says that further aircore holes are now being drilled around the discovery hole to test the extent.
We are awaiting completion and assays from these additional aircore holes...
Shallow aircore holes are a low cost way to get a “sniff” of whether there is a bigger prize to be chased with more expensive, deeper drilling...
And so far it’s looking very good.
IF more aircore results continue to be positive, BPM might be onto something... and say they will then do some deeper RC drilling to really find out what they might be sitting on.
The reason we like the potential of BPM’s new discovery is because it borders the $2.4BN Capricorn Metals’ Mount Gibson gold mine.
(Mount Gibson is Capricorn’s most advanced development asset and is being advanced toward development.)
(Source)
Capricorn’s development ambitions means that any economic gold discoveries nearby could be interesting from an M&A perspective.
After today’s result, BPM could potentially have discovered something that Capricorn might eventually show an interest in IF BPM can drill out an economic resource.
The logic is that:
- If Capricorn have already built a gold processing plant to extract their gold resource,
- and BPM manage to prove out their own economically viable gold resource nearby,
- then M&A is a lower risk path forward for Capricorn to acquire more minable ounces of gold opposed to them doing their own exploratory drilling.
This is just speculation on our part, and BPM still needs to actually drill out their new discovery and delineate an economically extractable gold deposit, and there is always a risk that BPM won’t achieve this.
But if BPM is blessed with some exploration luck and their upcoming drill campaigns are a success, then we will be a step closer to our Big Bet for BPM:
Our BPM Big Bet:
“BPM will return 10x by making a discovery and defining a deposit significant enough to move into development studies.
NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved - just some of which we list in our BPM Investment memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true.
Going into last Wednesday’s results, BPM’s market cap was <$3.5M on a 5c share price, which is most likely why the BPM share price is currently sitting at 9c with a market cap of $6M.
Proof to us that gold small caps are getting some much needed attention from the market after what felt like a very long 2-3 years in the wilderness.
We covered what’s happening with gold right now (and how it relates to small caps) in our latest weekend edition:
Rising Precious Metals Prices Fuel Optimism in Small Cap Markets
It’s not just share price re-rates we’re seeing, it's also on strong volume.
At one point last Wednesday, BPM touched 14.5c per share (up almost 200% from last week's Tuesday's close) on some serious volumes.
And by ~11:30am AEST on Wednesday, almost 1/3rd of BPM’s share register had changed hands which we think is important for setting a new base in the BPM share price.
Our take on the drill results:
The key takeaways for us from today’s announcement were as follows:
1. Headline intercept strong enough to be a discovery hole - 30m at 1.8g/t is strong enough to declare a discovery hole. Especially considering Capricorn’s Mount Gibson project has an average grade of 0.8g/t across its entire resource.
2. Shallow depths of ~25m - shallow is good because it could mean lower mining costs if the discovery grows into something that is economically viable to develop, or it could be the “tip of the iceberg” and deeper drilling will reveal more underneath.
(Source)
3. Short distance from a major existing project - This is the big one, BPM’s asset is next door to (literally next door) $2.4BN Capricorn Metals. BPM’s discovery being right next door to a major’s development asset adds a lot of strategic value to the project.
(Source)
What do we want to see next?
On its own, BPMs discovery intercept is pretty interesting and a great starting point (especially for a shallow aircore hole), but we want to see BPM extend and show to the market that it isn't just an isolated intercept.
We want to see completion of a few more aircore holes that are currently underway around the new discovery hole.
And if the aircore assay results are good (meaning the new discovery hole wasn’t just a “fluke”) then we want to see BPM commit to deeper drilling.
BPM says planning for a Phase 3 drill program has already commenced.
IF BPM can show that the gold mineralisation extends at depth and along strike then it could morph into a discovery that the market values a lot more than BPM’s current market cap.
(Source)
Bonus “loyalty” options on the way for BPM shareholders?
We also noticed in Wednesday’s announcement that BPM is planning an option entitlement issue to existing shareholders.
This would see BPM offer existing shareholders ONE new option for every THREE BPM shares held at a record date (that is not yet determined).
The new options would have an exercise price of 10c per share and a four year expiry + BPM said that they would look to have the options listed.
We think these options are suddenly a lot more interesting now that the BPM share price is above 10c per share and the company could potentially have made a strong gold discovery.
Risks
Exploration risk
BPM's projects are at a very early stage, any drilling programs done in the near-term could return no mineralisation or uneconomic mineralisation.
Funding risk
BPM is a junior explorer with early stage projects and no revenue or income.
It has roughly $2.1M as at 30 June 2024 and is undertaking an exploration program that will cost money.
BPM faces "Funding Risk" as there is always a chance it will be unable to raise enough capital for exploration activities or future drilling programs.
To see all of the risks pertaining to BPM read: BPM Investment Memo
Our BPM Investment Memo
In our BPM Investment Memo, you can find:
- BPM’s macro thematic
- Why we Invested in BPM
- Our BPM “Big Bet” - what we think the upside Investment case for BPM is
- The key objectives we want to see BPM achieve
- The key risks to our Investment thesis
- Our Investment Plan
Educational resources to help understand today’s article:
General Information Only
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